Former Georgia Insurance Commissioner Indicted on Fraud Charges

Sarasota, FL (WorkersCompensation.com) –A former insurance commissioner that once launched a criminal investigation into the CEO of a workers compensation insurer has now been indicted himself on conspiracy to commit health care fraud, and conspiracy to commit money laundering charges.

A Nashville native, John Oxendine served terms as the Insurance Commissioner from 1995 to 2011. In 2010, Oxendine ordered his Fraud Unit to begin a formal investigation into the business practices of M. Clark Fain who served as the CEO of workers compensation insurer Southeastern U.S. Insurance, Inc.(SEUS).

According to a 2010 Georgia Public Broadcasting (GPB) report, SEUS claimed to have been the third largest workers compensation in Georgia. After noticing accounting discrepancies, the company was shut down by a Fulton County judge. Tim Ryles, the former Insurance Commissioner in Georgia, stated that when the company started doing business in Bermuda after a spate of expansion and low rates, it was a clue that something was amiss. Additionally, Fain was associated with another 90’s controversial workers comp company, First Oglethorpe. First Oglethorpe was investigated for a questionable loan deal but was ultimately cleared. Per the GPB report, Fain gained Oxendine’s attention due to a $10 million land and loan deal between SEUS and Fain.

In a curious turn of events, last week, the Northern District of Georgia Department Of Justice announced that Oxendine himself had been indicted by federal jury on May 17^th, and arraigned on federal charges of conspiracy to commit money laundering, and conspiracy to commit health care fraud. The indictment asserts that Oxendine conspired with Otolaryngologist Dr. Jeffrey Gallups and other co-conspirators to submit medically unnecessary Pharmacogenetic, Molecular Genetic, and Toxicology lab testing to insurance companies for payment.

In December of last year, Gallups who was a former found of The Ear, Nose & Throat Institute, and Entellus Medical agreed to pay out $3 million and $1.2 million to resolve allegations of unlawful kickback arrangements that violated the False Claims Act between 2014 and 2018. Labs were ordered from a now closed company NextHealth, and in return NextHealth paid 50 percent “commissions” to Gallups.

Additionally, investigators alleged that Entellus, which was purchased by Stryker in 2017, paid kickbacks in the form of all expense paid trips and cash to Gallups for use of Entellus sinuplasty medical devices during his surgeries, and to increase that use among surgeons at his associated healthcare groups. Upon Stryker’s acquisition, Stryker’s compliance department flagged the practice and agreed not to renew the previous Entellus agreement with Gallups, and agreed to pay out the $1.2 million settlement.

According to the announcement, investigators allege that over $2.5 million in unnecessary lab tests were ordered by Gallup’s practice. The lab company received over $600,000 in payment and then paid $260,000 in kickbacks through Oxendine’s insurance services business. Part of that money was then allegedly used to pay Gallup’s debts, $150,000 charitable contribution, and $70,000 in attorney’s fees.

Oxendine founded the The Oxendine Group, which is made of up two separate corporations. One is a boutique law firm specializing in insurance regulatory law. Also included is the Oxendine Insurance Services, Inc which is an expert witness and insurance consulting firm. The group has been temporarily been closed.

According to a report from Valdosta Times, Oxendine’s defense attorneys released an emailed statement saying that Oxendine was being targeted because of his name, but that he had not broken any laws and is innocent. 

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